The U.S. Small Business Administration issued a one-page application form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, along with newly updated and revised forms that comply with the most recent stimulus legislation.
The COVID-19 relief package that Congress adopted last month revived the PPP with $284 billion in financing for small-scale businesses looking for forgivable loans to help them deal with the financial fallout from the coronavirus outbreak. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was done to make it easier to apply for forgiveness. It also included conditions that encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs said that the Small Business Administration fulfilled the requirement to issue the PPP form, which is one page long, for loan forgiveness within the first 24 hours from the date of the enactment of the Consolidated Appropriations Act, 20,21. This was on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also released new forms.”
First Draw PPP Terms of loan forgiveness
Loan Forgiveness Programs For Medical Students – For borrowers who are eligible First Draw PPP loans are suitable to be forgiven. This is if the loan disbursement occurs within an 8– to 24-week period.
- This is also true for employee compensation and the.
- The loan proceeds are spent on payroll expenses and other expenses that are eligible and
- Minimum 60% of funds go to expenses for payroll
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans given to borrowers who meet the criteria are eligible for total loan forgiveness if they do so during the 8to 24 week covered period following the loan’s disbursement
- The First Draw PPP loan requires that the employee and compensation levels be maintained in the exactly the same manner.
- The loan funds are used on payroll costs and other eligible expenses; and
- At least 60% of the proceeds are used to pay for payroll expenses
- How to request loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds for which the borrower is requesting forgiveness have been used. The borrower can apply for forgiveness at any point up to the date of maturity. If the borrower does not apply for forgiveness within 10 months after the date of expiration of the time period that was covered, then PPP loan payments can not deferred any longer, and borrowers must make monthly payments to their PPP lender.